May 23, 2019

Streaming's cancel culture problem

Illustration: Lazaro Gamio/Axios

HBO's "Game of Thrones" may be over, but for lots of streaming media companies, winter is coming.

The big picture: Data shows that consumers across all ages are more than 30% likely to cancel a subscription streaming service after the show or series they are watching has ended. This creates big headaches for streaming companies over how to keep consumers from leaving, especially as the streaming space grows increasingly competitive.

Driving the news: Most critics and analysts believe that the end of HBO's fantasy hit "Game of Thrones" will not be the total end of live, appointment television, although the decline of that viewing mode is quickly intensifying. But the conclusion of "Thrones" does offer the media industry a case study of what could happen when the next big hit comes to an end.

  • A new Axios/Harris poll conducted after the "Game of Thrones" finale aired found that that 16% of HBO subscribers say they planned to cancel their subscriptions now that the show is over.

By the numbers: Most people only plan to hang onto subscription services for less than 6 months upon initially signing up, according to the most recent Video Entertainment Survey from media research firm Frank A. Magid and Associates. That number dips lower for older age groups.

  • Half of the Gen Z respondents from the survey said they intend to cancel their account after watching a specific or exclusive video at sign-up. For Millennials that number goes down to 45%, for Gen X it's 36%, and for Boomers it's only 32%.
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Data: Frank Magid & Associates; Chart: Axios Visuals

Be smart: "Churn," or the industry term for consumers dipping in and out of subscription services, is much less likely to occur with traditional cable subscriptions, because leaving your cable company is hard.

  • Most cable companies require the return of a piece of hardware, like a cable box, and the customer service at those types of legacy companies tends to be inefficient.
  • Streaming services, on the other hand, give consumers the flexibility to sign up easily online and download and install all the necessary software without ever having to talk to a customer service agent. But it also means that they can cancel their subscriptions at any time with virtually no penalty.

What's next: Streaming services are becoming more sophisticated in leveraging marketing deals to reduce user churn.

  • Many are adding free memberships to cable and music subscriptions — subscriptions that people tend to renew annually. Hulu, for example, gives users free access with their Spotify Premium subscriptions.
  • Others are investing more in marketing shows so that they remain relevant longer. Michael Benson, the head of marketing for Amazon Studios, explained how Amazon created a real-life pop-up deli, modeled after the one featured in Amazon's hit show "The Marvelous Mrs. Maisel," to bolster the show's relevance and real-life impact.
  • "You use pieces of IP (intellectual property) to create big social cultural events. People like to join in on those types of things," he told Axios at the Collision Conference in Toronto on Wednesday.

Context: The problem isn't confined to the video streaming world. Jill Rosengard Hill, EVP at Magid Associates says younger people are less loyal to all subscription services overall, not just video.

  • * "Boxed services with easy technological sign-ups for food, clothing, etc., make it easier for consumers to dip in and out over these services. They will instead opt to have their needs met by different services in a seasonal fashion," she told Axios last year.

Bottom line: The ease with which consumers can sign up for and then cancel a streaming service subscription creates a lot of headaches for streaming companies trying to establish loyal user bases in an increasingly competitive field.

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